Question

Product-Costing Accuracy, Plantwide and Departmental Rates, ABC Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products: Product-Related Data Scientific Business Units produced per year 75,000 750,000 Prime costs $250,000 $2,500,000 Direct labor hours 100,000 1,000,000 Machine hours 50,000 500,000 Production runs 100 150 Inspection hours 2,000 3,000 Maintenance hours 2,250 9,000 Department Data Department 1 Department 2 Direct labor hours: Scientific calculator 75,000 25,000 Business calculator 112,500 887,500 Total 187,500 912,500 Machine hours: Scientific calculator 25,000 25,000 Business calculator 400,000 100,000 Total 425,000 125,000 Overhead costs: Setup costs $225,000 $225,000 Inspection costs 175,000 175,000 Power 250,000 150,000 Maintenance 200,000 250,000 Total $850,000 $800,000

Required:

1. Compute the overhead cost per unit for each product using a plantwide, unit-based rate using direct labor hours. If required, round your answers to the nearest cent.

Plantwide rate	$ per direct labor hour
Overhead cost per unit:
Scientific	$ per unit
Business	$ per unit

2. Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for Department 1 and direct labor hours for Department 2. Repeat using direct labor hours for Department 1 and machine hours for Department 2. Round your intermediate calculations and answers to the nearest cent.

Departmental rates:
Department 1	$ per machine hour
Department 2	$ per direct labor hour
Overhead cost per unit:
Scientific	$ per unit
Business	$ per unit
Departmental rates:
Department 1	$ per direct labor hour
Department 2	$ per machine hour
Overhead cost per unit:
Scientific	$ per unit
Business	$ per unit

3. Compute the overhead cost per unit for each product using activity-based costing. Round your calculations and answers to the nearest cent.

	Overhead Cost
Scientific	$ per unit
Business	$ per unit

Answer 1

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